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tv   Countdown to the Closing Bell  FOX Business  February 4, 2013 3:00pm-4:00pm EST

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liz: off the lows, but a sell off nonetheless on wall street. the biggest one this year. granted the year is young, but buyers today are few and far between. here it is on your screen. the dow 30 mostly in the red, with just boeing, verizon, cisco and united health group moving higher. good afternoon everybody. i'm liz claman. countdown to the closing bell begins right now. last hour of trading. blue chips are back below that key level, retreating from five year highs. while we are down 97 points, we had been down 142. so again 50 points off the lows, not so bad. we will take it. s&p 500 down 37 -- sorry, nasdaq down 37. the s&p down 12. straddling the 1500 mark right now. what is behind the weakness. place the blame on europe. structural reforms may be put on hold, especially if italian prime minister berlusconi gets back into office. he is a contender in general
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elections that will take place later this month. then you add to that question about the corruption in spanish prime minister's office. take a look at $1.35. four trading sessions ago we were at $1.37. the euro taking a hit down more than a full cent versus the dollar. biggest drop in more than two weeks. because we're seeing a stronger dollar, what else are we seeing? a flight to quality bid in treasuries. ten year yield now below 2%. uncertainty back in europe. so should you the investor run screaming away from euro fears again? david darst chief investment strategist at morgan stanley waiting in the wings. he has some advice that might surprise you. he has five names he believes you can take advantage of right now that no matter what happens in europe, and by the way, he's not worrying about europe, will actually help your portfolio. speaking of not worrying about europe, for a few weeks, it was
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fun while it lasted, ben, you could argue as we bring in the floor show, after hitting five year highs the markets were looking something to sell off on and they got it. >> absolutely. i think the european situation is an excuse for a market that's had a great run through the month of january. it needs to take a break. it's something i've been looking for the last time we talked, i talk about looking for a pullback. you know, we had the last day of the month after a great month and the first day of the month. those are usually significant days for inflows and markets continue the trend they have been in. now that's out of the way, i think we will finally get the pullback i have been talking about. liz: larry, you know, i'm looking at where we stand for the s&p 500. 1499. just at about 1500. looking at the futures rate of about 1500. are you concerned by a day like today? or after hitting past 14,000, everybody getting excited or it's just sort of yeah we kind of expected this. >> yeah, i think it is good. i think the other traders are going to say the same thing. we have been looking for the
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pullbacks. we want to be long these markets. government backstopping is not going to stop any time soon. the economy in certain places seems to be getting better. that's something that professional traders and your viewers want that. if we keep blowing through support levels get below 1480 and 1460 i think traders will start to worry. i think this is a temporary pullback. the markets get back above 1500 and markets will keep rallying and hopefully guys will get good trades. liz: s&p 500 is actually quite attractive i would say if you have been in the market certainly. but i look at this and i say tom reilly, that i don't get worried about that oil falling, you know, i'm not speaking of the consumer. i speak as like one of you guys down there on the floor because we have a stronger dollar today. so if you look at the dollar versus the euro, you see that should not be a surprise considering oil is denominated in dollars. >> no, not at all. i think that was the main factor as to why we were so low today. i think any pullback, just like as your previous guest said, in equities, any pullback in oil
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below 95, you are going to see buyers come in, maybe down to 93, it will get, but you will see a lot of people come in there. i think -- i think we will continue our slow march towards 100 and probably get there next two months. liz: again you say slow march to the 100, we have had a lot of traders and say yeah next stop is 100 but with a few blips like what's happening in europe. gentlemen, great to see you. the consensus don't freak out, because we got a bad headline out of corruption in spain, i mean, please while the rest of us were crying over the budweiser clydesdale -- i know, i cried. i tried not to and i cried. sure enough that commercial actually shed tears. let's go back to shedding tears over europe, don't. mr. bullish on europe is here or at least not as worried as the markets appear to be today. he's david darst morgan stanley's chief investment strategist. the last time you were here --
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is this something where you feel that might have legs, big concerns in europe? >> here's the question for you and your viewers, liz. is this a 2 to 3 percent little tiny correction that's a healthy correction? look vix was 12.98 on friday. very very low. there's a complacency there. american association of individual investors latest survey 49% bulls. only 24% bears. the long-term average is 39 to 30. overamount of bullishness. the basic story of europe is financial conditions calming down. they relaxed the banking requirements. they basically eased off on the banks. the bond yields have come way down. the greek bonds, the best performing asset class in the world last year were greek bonds, up 88%. liz: but people today are focusing on spanish and italian bonds, because they ticked up. >> this is going to turn out we think to be a mild recession. so valuation is very cheap in
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europe. things are picking up fundamentally in their markets, emerging markets. we think within europe. so the bond yields are calming down. liz: see how they have calmed down days and days and then -- >> they have come up a little bit but way off of last summer. we're buyers of europe and japan. liz: you sold me on not being worried about europe. however, when i look at your s&p 500 target for 2013, which is what, 1498 -- >> yeah, it's below -- liz: it's below where we are now, david. are you a bull or bear? >> emerging market equities you want to have large cap growth equities. look at some energy stocks this year have done very well. up 14%. market is up 6%. they are up 14%. your drilling stocks, you want to be in these sectors liz that have exposure to global growth. you want to be in the healthcare sector. it's a sector emphasis. we think the average will be lower but we think you have got emerging markets, japan, europe,
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those is where we would be focused. liz: people missed a year ago when you were standing here and saying you should be comfortable with having a decent portion of your portfolio in equities. have they missed it? am i overstating that? too late to get in? >> i don't think they've -- i think you want to watch any pullback and let that pullback take place and then buy on any pullback. basically your four p's, profits, production, personal income and politics. that's the one thing that could throw things into politics. debt downgrade of the united states, liz. liz: s&p already downgraded us a year ago, august. >> a year ago august, the following month, it happened at 5:15 on august the 5th, 2011, a year ago august. august the 8th, the following
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monday, 19 billion shares traded. the average is 3 1/2 billion shares a day. so six times normal trading volume. market was down 7 1/2%. there was a lot of worry over this debt downgrade. liz: but i tell you that night, i remember it well, i picked up the phone, i called warren buffett, i called into fox news because they had live programming, we also broke in on fox business and warren buffett said i'm not worried. the treasuries of the united states, you think we're going to default on those? and sure enough the reaction was people piled into the very thing that had gotten downgraded. >> liz, great point. the yields then were about 2.8. they're 1.97 now. they're lower. people have been buying. one of the things that gives us confidence about europe is the swiss frank and the german bond, which were places for people to hide. they have actually been selling off as people have been putting money back into the peripheral countries. 96 billion euros have flown in in the last two months into the peripheral countries. the german bonds and the swiss
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frank are both down 3 to 5 percent from their peak. so we say this fear trade which buffett highlighted, the u.s. is not going to default, but the reason they downgraded us was political dysfunctionality, liz. and that's a theme we remain with, dysfunctionality, deleverage. liz: david darst is coming up with five names in a minute for your portfolio. so stay tuned. i'm so thrilled to have you here on a day like this where we're falling. people get a little nervous. don't be david says. the closing bell ringing in exactly 50 minutes. whole foods a favorite on wall street over the years, with its stellar margins, steady traffic in stores, strong growth and it all started as a dream that co ceo and co founder john mackey says still operates as a dream in his mind and in the shareholders minds it should.
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the tenets of mackey's conscious capitalism. he's going to outline these for you. will it work for you and your company? he says it will. you need to hear it. it's a fox business exclusive. ♪ i'm a conservative investor. but that doesn't mean i don't want to make money. i love making money. i try to be smart with my investments. i also try to keep my costs down. what's your plan? ishares. low cost and tax efficient. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
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we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about hisendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male nouncer ] hold packages at any fedex office location. you know how painful heartburn can be. for fast, long lasting relief, use doctor recommended gaviscon®. only gaviscon® forms a protective barrier that helps block stomach acid from splashing up- relieving the pain quickly. try fast, long lasting gaviscon®. your financial advisor should focus on your long-term goals, not their short-term agenda. [ male announcer ] join the nearly 7 million investors who think like you do. face time and think time make a difference. at edward jones, it's how we make sense of investing.
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liz: investors are not liking facebook today. social media giant adding to friday's losses. let's go to nicole at the new york stock exchange for details. nicole? nicole: hey, liz. i wanted to take a look here at facebook which is tacking on to the losses of friday as you noted. down almost 5% here. down $1.41, at 28.32, below the $30. quarterly report, couple of things in the 2012-10k filing, facebook noted that its pc -- the computer daily active users actually declined modestly in the fourth quarter. however they did see a shift to mobile which is what a lot of people had obviously invested in facebook for, mobile ad revenue, mobile growth which they are seeing. that rose 5% quarter over quarter. they also mentioned 27 million users for daily active users,
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and they relied on facebook payments which has not yet extended to mobile. certainly, they certainly have the users and the presence and mobile ad growth. yet, they are still coming under pressure. they didn't necessarily meet all the numbers that wall street had been hoping for. back to you. liz: well, maybe the baby horse will get everybody back. did you cry? i cried at the budweiser baby horse. nicole: i cry every time. liz: i tried not to cry. it didn't work. i held out to the last moment. thanks nicole very much. it started as a business that began in an old house in texas 30 years ago. there it is. that old house. today the company has expanded to more than 340 locations with more than 70,000 employees. despite the tremendous growth and success of whole foods, co founder and co ceo john mackey remains focused on the original core values. can you really make money by doing that? he proves you can.
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he put it into his new book "conscious capitalism". joining me now from washington john mackey in a fox business exclusive. welcome, john. i wanted to bring you on because, a, you're a great business leader. but also, you know, asking you can these core capitalist ideas that are infused with conscious capitalism really work for everybody's company? so, we begin with your version of capitalism which is completely different from milton friedman's which is everything you do goes back to just making the almighty dollar. how are you different? >> we think that of course business has to be profitable, but we think that it starts with business having a higher purpose beyond just making money. doctors have a higher purpose. they heal people. teachers educate. architects design buildings. business is the greatest value creator in the world. that's its purpose, to create value for customers, create value for all of its stake holders, its employees,
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suppliers, investors and the larger communities that we're part of. liz: you know, as a very strong business, you start with what some people might think would be a very softy heart, and in your book, one of the things that jumped out at me was your version of imagine. and we pulled out some of these, and when you talk about your version of imagine, you're talking about imagine a company that, for example, is a business born out of a simple dream. we will talk about your dream in a second. a business that cares about customers' well being. a business that hires with great care. what was the original dream here for you? >> the original dream was basically to sell healthy food to people and help them live a healthier lifestyle, earn a living, and have some fun. of course our purpose has evolved over time. now we're actually trying to embrace, trying to heal america. i mean 69% of america is overweight. 36% is obese. the diseases that kill us, like heart disease, cancer, diabetes,
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these are mostly dietary and lifestyle diseases. liz: and you held on to that all the way through, and that's where you were able to come through with your four tenets of conscious capitalism. we made the pyramid so people can understand. these include everything from shareholder integration and all kinds of other ideas where you're talking about conscious leadership, culture management, being great to your employees, but i push you by saying so many businesses are focusing on surviving and reacting to marketplace changes that they kind of put their purpose to the side. >> we think that's a mistake. one of the things we discovered in our research in the book is that businesses that have a higher purpose and businesses that care about their stake holders outperform in the marketplace. not by a little bit, but by a lot. we showed public companies that we identify as more conscious and following the tenets of
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conscious capitalism have outperformed the indices, the s&p 500 by more than 10x over the last 15 years. liz: can you throw out a couple names? >> sure, yeah, google, nordstrom's, panera bread, starbucks, southwest airlines, whole foods, the container store, a couple of foreign countries, a group in india. there's a number we identify in the book. liz: i look at these and i think this is how i would think but i'm very sort of california, i get that whole thing, and you were in texas when you founded this, and you were -- look, you talk about in the book how you went with counterculture in the early years and looking at a cooperative, but then you kind of found capitalist in that you realize it is great to make money and grow business. now not only are you at 340 stores you have pretty much telegraphed that to the market you want to triple that to about a thousand stores. are you worried you might lose the conscious capitalist theory
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in growing as quickly as you want to grow? >> i don't think so. we're growing slower than we have grown before in percentage. we have a dynamic culture that's well integrated in the conscious capitalism tenets. i'm not worried about that. i have just written a book that our team members are reading. if anything, it is getting stronger in this regard. liz: when you hear from big corporations who say that's all very touchy feely nice, but it is not going to work here. we care about how analysts feel and our biggest shareholders, what would be your response to a leader who says that? >> well, i do think we have to care about our investors. they are one of the important stake holders. we need to create value for the investors. i would tell them this is the best strategy to increase shareholder value and increase profits that creating -- having a higher purpose and creating value for all your stake holders will result in greater value creation for investors.
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if you put the investors first, paradoxically you will probably sub optimize, you will not get the same kind of commitment from your customers and employees and supplier group as you would if you're following a higher purpose. liz: that is the key. i'm glad you ended on that because to me you get a lot of people saying yeah but i'm cutting costs, i'm doing this and that, even in your forward, you have mr. george of medtronics saying in essence, maak hurd way at hewlett-packard did not work. it's an interesting point you make. thank you, john. i'm holding up the book right now. i recommend people read this especially if you feel don't let go the dream, you will make money and your company will grow, one small house to 340 stores. thank you very much. >> thank you liz. liz: john mackey is whole foods market co founder and co ceo. by the way, he lost his entire one store once in a flood, 30 years ago. came back.
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closing bell ringing in 38 minutes. a wild day of trading in herbal life. what caused that? charlie gasparino has the developments on the other side of the break. stay tuned.
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liz: here's your fox business market check. consumer staples joining the rest of the market falling into the red. but check this out, completely bucking the trend, well, not that, but clorox, hitting an all-time high today. after a strong second quarter report. flu epidemic helping drive up sales of clorox's cleaning products. herbal life, let's get to it because that's what charlie is talking about. this is an amazing behavior in a stock today.
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dropping dramatically, right now shares recouping all of their losses. a wild day of trading. >> we were the first to report that herbal life and this is why it recovered was -- [inaudible] -- which could close it down if it is a ponzi scheme as bill ackman says it is. we were first to report they were going to come out and deny it. they came out and denied it. i would say about a third of the way up, not even, i would say a little up from their lows is when fox business first reported and it's been up ever since. if you listen to fox business, you traded on some of the stuff that we've been talking about, well, guess what? you made a lot of money on this stock. this is a stock you trade basically as a day trader. if you're a long-term investor, and you're in this thing, you are crazy, because this is going to be going on for a while. point out some of the stuff that happened late.
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herbal life put out a statement basically said there's no investigation, at least as far as we know. this is big, ftc closes companies down for pyramid schemes, as it's been alleged by the short seller. when you're under investigation by the ftc, they tell you, herbal life is out there saying they haven't been notified. here's the interesting thing, couple things, herbal life complaints kind of been on par like they were last year, 38 complaints they may have this year. that's not a lot of complaints. we should also point out that some of the story about them being under investigation was sparked by boilerplate language that was in a freedom of information request by a reporter who reported this boilerplate language which seemed to suggest that they were under investigation. the ftc has now issued a statement saying it put the wrong boilerplate language in there, which would have, you know, kind of lessened the blow and maybe not led to this.
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the ftc is responsible, i would say today, for taking out billions of dollars, hundreds of millions -- liz: they got much of it back. just to let people know, opening trades here, down 10%. >> dramatically and now we're up marginally. liz: there was something in the new york post and suddenly now -- >> we should point out that the new york post quoted the foi request -- liz: freedom of information. >> the ftc wrote back to them, the new york post saying we're giving you this information. some of the information has been redacted because of a government investigation. the new york post quoted that exactly. everybody in the market thought that was an ftc investigation. i can tell you that if you go back -- if you really dig into that thing, what they said in the foi request and the citation of the freedom of information law, the rules that the ftc has to abide by, go back to those
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laws, which i did, there's a lot more wiggle room. they basically can redact stuff based on any type of investigation, like the dogcatchers investigation. liz: who is on the losing end today, is it bill ackman who hates this company and is trying to short it? >> i don't know. listen, i'm covering this like baseball. i'm going to give you day by day -- i can't tell you if he's totally wrong. i can tell you when he went after mbia, the bond insurer back in 02, he ultimately was right in 08, but right for not the reasons he said it was. sometimes he's off the mark. he was off the mark with mbia on specific causes. he threw out the stuff about accounting irregularities. it was just really they insured sub prime stuff. liz: did you cry during the budweiser baby horse commercial? >> i don't care about the commercials. i'm the only person -- i was
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into the game. what was that? liz: if you have to ask -- >> i don't know, i didn't care about my of the commercials. there was one good commercial where a guy meets his old girlfriend who turns out to be crazy and he's with his hot wife. his new wife, i definitely noticed her. liz: i liked the oreo commercial in the library. >> i don't remember that. i was into the game. the game was amazing. liz: charlie, thank you. closing bell ringing in 29 minutes out of the nearly 50 analysts, covering this next stock, none have a sell rating on google, but today, there's been a downgrade on google. that caused shares to fall as you can see right now by about 14 bucks.
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youssef squali is next. it's a new day.
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>> i'm sandra smith with a fox business earnings preview. focusing on yum! brands today. shares of the stock following the markets lower ahead of its expected fourth quarter earnings report after the bell tonight. analysts are expecting earnings of 82 cents per share on revenues of 4.13 billion dollars. investors should be watching for any impact from china. the company did warn earlier this year that a hormone growth chicken controversy in china would hit fourth quarter earnings. china makes up 45% of its sales. so analysts are also looking for any forward guidance for china. competit
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competit competit competitor chipolte. for more on yum! brands we will have full coverage of that release starting at 4:00 p.m. eastern on after the bell. don't miss that. and now we continue our countdown to the closing bell. liz: thank you very much. we have some breaking news here. the ratings information is in. and here it goes for the super bowl as i put on -- sorry, excuse me. cbs confirms that the super bowl xlvii was watched by an estimated 108.4 million viewers. maybe we can look at the stock right now. see what it's doing. super bowl xlvii was the third most watched show in history.
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i mean the food, the commercials, everybody, it looked good. we're watching some commodities rise with some help from mother nature, but shares of one oil and gas company are under pressure today. let's go, we have jeff flock at the cme. nicole at the new york stock exchange. jeff, what are we talking about here? >> you look good with glasses on by the way. liz: thank you. jeff: we look smarter don't we? oil is your big story today i think from the cme today. biggest pullback in oil percentage wise and point wise in the last two months. take a look at oil. look at that three months chart, it shows the way it's been running up. today it wasn't just the broader market sell off. we are at the edge of the euro dollar futures options pit here. there was a big deal today. real strong dollar also helped oil's fall, and i think vice president biden sort of olive
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branched that that also had an impact on oil prices. big news that came out today from the energy department, take a look at these numbers how much we are spending to fill our cars with gasoline. almost $3,000 for the average household last year. that is about 4% of our income. that's the highest that's been since 2008 and, before that, since the 1980s. that's huge. gasoline's big bite. take a look, up 3.4%, household income. gasoline up 26%. we're spending a lot more -- we're consuming less, but we're spending a lot more for it. electric cars, come on. liz: hey, you know what? i'm getting there. i really am, especially after hurricane sandy. thank you, no gasoline, i didn't like that. nicole, let me get to you. what do you have your eye on? nicole: you make a great point, liz. i want to take a look at an emergency name -- at an energy name, looking at exxonmobile. take a look here at exxonmobile,
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this dow component. down nearly 1% here today for exxonmobile. remains under pressure. they have reported a drop in production volumes over the past year. they've been working on replacing some of the older oil fields as well. and that's going to cost them, easier said than done, they need time to get this developed and that's been pressuring exxonmobile here today on a day where got to take a peek at the dow, the dow is lower. and it's down about 124 points right now. liz? liz: i know, but 142 was the low of the session. so at least we've got that going for us. thank you, nicole. google shares are down today after bmo capital markets did something unusual, they downgraded the stock, not the worst thing in the world. they downgraded it to a market perform, but the analyst behind that call, we invited him to come on today because it is a little unusual, there aren't many if any negative calls on this one. less than two hours before the show, dan backed out because he didn't want to defend his call
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against my next guest, youssef squali who said bmo's call was quote ridiculous. what's behind the downgrade, he says the valuation is too high, he used to like it. the market has become comfortable with the cost per click decline. and the benefits google is getting from apple's fall are coming to an end. we bring in youssef squali who thought the call was ridiculous. talk about your reaction to that call. >> couple of things, if you look at the stock over the last three, four years, it really hasn't done all that much. over the last couple, four, five months it has seen a nice run-up, that's true, but at the same time, it hasn't even caught up with the rest of the internet universe. if you look at our internet universe, it is up something like 90% over the last five years, google over that same period is up maybe 20, 25 percent. that's number one.
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number two, if you look at the valuation in and of itself, the stock may be trading 16, 17 times p-e, adjust that for cash, and it's actually trading around 12 times or 13 times. liz: you said adjust that for cash. google has about 48 billion in cash. if you squeezed out the cash, put it aside then you get a much lower p-e that you feel you're comfortable with, correct? >> correct. you get to a p-e of about 12 to 13 which adjusted for growth, google is growing much faster than the s&p 500 than you're getting a cheaper stock than the market. i think that's cheap. liz: okay. let me take dan's side since he stood me up. i think i'm being pretty nice. dan says, and i wouldn't disagree with him on this, google has not at least proven to the market that it has in a more exciting way monetized its big purchase of youtube. we have been talking about the
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budweiser clydesdale commercial. 6.3 million hits on that commercial on youtube. i just checked. it's such a good commercial, but i don't really see how they are monetizing that. if they were able to do that in a better way, why not then take dan's side of it and say what are they doing over there? >> one of the problems google doesn't tell you how much they are making out of youtube. they're not telling you how much they are making out of advertising in general. we're left to read the tea leaves. when we do, we're coming up with display advertising in general, the biggest portion of it being youtube, accounting for somewhere in the 8, 9, 10 percent. so this is a business they acquired five years ago. we think it is doing in excess of a billion dollars right now. so they are monetizing youtube. they are just not telling us. liz: i would love for them to tell us especially when it is a publicly traded company.
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>> same here. liz: -- you know, she left google. was that a loss? i hear honestly different sides of this. some people say she's extraordinarily intelligent. a lot of trouble getting people to work under here over there at google and it's not net, net, really any big issue that she left there. >> i think google is bigger than her. think it is bigger than tim armstrong who left to go to aol. the company now has a very deep bench of executives. we cover yahoo! and we think marissa is a great gate win for yahoo! -- great great win for yahoo!. our view of google is not going to change because tim left three years ago or because marissa left last year. liz: you don't seem that scary to me, but dan seemed to be.
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dan is always welcome to join the show. thank you for being here, youssef. we will be right back. tough day on the markets. [ male announcer ] i've seen incredib things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪
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liz: oh it was much love, still is by many people, but one stock has been a sour apple in the market lately, disappointing investors with earnings sales and everybody's favorite product, you guessed it, apple's iphone 5, but not everyone is bearish on the stock. even though now it is down about 2% year over year. david darst is back, morgan stanley smith barney chief investment strategist talking about why he still wants to take a bite out of apple and a few other stocks.
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let's bring up some names you really like. apple first. >> they are going to raise the dividend. they are going to buy back stock. sitting on 137 billion dollars in cash as you know. the market cap is about 400 billion. so they have got 30% of the market cap in cash. we think they can earn $50 -- our analyst -- you put a 14 multiple on that, 50 times 14 is $700. the stock is $430. china mobile if they get a contract, that's 700 million potential phones. china mobile, 700 million phones. secondly is the smart tv which is coming and the low-priced iphone and ipad which are coming. so apple has a bunch of catalys catalysts. it is a phenomenal thing it's corrected from the $700 back in september. they are going to raise the dividend this year. liz: let's go to your next one. qualcomm, related to apple because the chips are in the phones. since you brought it up i believe november 27th, the stock
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is up 8%. see folks this is why you listen to our people here that we bring in. but why still qualcomm at the moment? >> liz, paul jacobs, whom you have interviewed, is a great manager. he's succeeded his father. they basically make the gasoline that makes all of these smart phones work. okay? as you mention a moment ago, whether it's apple, whether it's some of apple's competitors, they cannot work without -- what intel was to the personal computer, qualcomm is to the smart phone mobile internet revolution. so that's why you want to own qualcomm. liz: i'm surprised you don't pick samsung because it makes both the chips and the galaxy phone which are very hot. >> they have a phenomenal following in asia, as you point out. they both split about 40% of the market, both of them. however, apple gets about 2/3 of the profit. they get a premium price because of this -- it's the louis vuitton effect of an apple out
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in asia. they're very brand conscious. liz: you talked earlier about the global gorillas, 3m fits into that. >> dividend play, it yields 2 1/2, 3 percent. organic growth of 4 to 5 percent. global footprint. healthcare, high margin products. expanding margins, expanding profits. liz: quickly on pfizer because i know we love the dividend on pfizer. >> the pipeline is filling up. a lot of new products. finally emerging markets are becoming more and more important to pfizer, and we expect they will continue to have great revenue growth out in the emerging markets. and their gross margin is 79%. liz: we like that. that's a good gross margin. finally your last pick? >> that's a conceptual pick. it is japanese equities hedged into dollars. this is your big exporters. as you know since november 1st, the japanese stock market is up 22, 23 percent, but the yen is
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down 14%. so in dollars you're only up 7%. unless you have been able to hedge it liz. liz: we just picked this one out in our directors booth, dxj you can start to see in the far right part of that chart it started to move higher. it is a wisdom tree fund japan hedged equity. exactly what you are talking about. here's the five year. it is far from where it was five years ago but making its way up again. david, thank you. >> nice to be here. liz: did you cry over the baby horse commercial? >> i sure did. our whole family watches the commercials. liz: thank you, david. closing bell six minutes away. we're going to dig more deeply into a downgrade that's making the holders of this drug stock feel a little under the weather. can you guess the one stock we're talking about? we will tell you after the break. i'm a conservative investor.
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liz: as we close in on the lows of the session, look at merck right now. it is falling, give or take about 2%. a couple downgrades on this stock that brought it to this point today. morgan stanley downgrading it to an under perform, swan to a market perform. worries that about 75% chance that the large improvement study might fail. that's what happens with the reports or potential for a report. merck held by many of you at the moment falling by 2%. so is the market, 137 points for the dow jones industrials, not a great day. awaiting numbers. david asman, awaiting for "after the bell." david: close to session lows, trading towards the dow

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